Meaning of Inflation: In a simple sense, inflation means a rise in the general price level. It is a monetary event and economic problem.

Definition of Inflation:

• Dr A. E Lemer: A situation of excess demand over supply of goods is called inflation.
• Dr A. C. Pigou: Inflation is said to occur when monetary income rises faster than real income.
• Dr J. M. Keynes: The real situation of inflation is created with increase in money/income beyond the level of the full employment of factors of production.

Characteristics of Inflation:

• Constant rise in price level,
• Price rise in all sectors of economy,
• Purchasing power of money decreases,
• The rise in price level after full employment and
• Keeping control over increase in price level by rules or law, it is considered inflation.

Causes of Inflation:

1. Increase in demand
   • Increase in supply of Money,
   • Increase in public expenditure
   • Over-population.
2. Increase in cost of production.
3. Other reasons
   • Taxation policy
   • Increase in price of import
   • Scarcity.